The gambling landscape in Brazil: past and present
Unlike many other jurisdictions worldwide, the legal situation for gambling in Brazil over the last decade has been unambiguous. Before 1941, gambling was considered an exciting form of entertainment, and the country enjoyed a lively casino culture.
The landscape shifted dramatically, however, with the introduction of The Criminal Contravention Act of 1941, prohibiting all games of chance. President Eurico Gaspar Dutra consolidated this policy in 1946, decreeing an outright ban on all forms of gambling. This move, attributed to prevailing moral and social concerns, resulted in the removal of casino permits, leading to the closure of the country’s gambling venues.
This situation remained for decades. Poker was the only legal game because it was, and still is, considered a game of skill rather than chance. Despite the ban, there remained an underlying appetite for gambling among the general populous. A move towards greater liberalisation began in 1971 with the legalisation of a state-owned lottery (Loteria Federal), followed by support for non-commercial bingo and horse racing in subsequent years.
The advent of online gambling in the mid-eighties continued the ongoing pressure on the government to legalise gambling. It was argued that the restrictions only applied to gambling operators within the country and did not stop licensed offshore operators from enjoying rising profits in a nation with a strong interest in sports.
Gambling in Brazil has been unregulated for the past eight decades. This situation changed in 2023 when the Chamber of Deputies approved a bill to regulate sports betting. Shortly after, on December 30 of that same year, Bill number 14.790, outlining the legal framework for gambling in Brazil, was passed into law.
While some land-based activities remain prohibited, licences are now available to sports betting platforms and online casinos, opening the door to fixed-odds betting opportunities in the country. The law aims to boost economic growth through job creation, attract tourism, and encourage foreign investment.
The iGaming industry has evolved rapidly in recent years, and this is an exciting time for foreign and domestic gambling operators seeking to enter this new market. Understanding the prevailing changes to laws and regulations is essential for successful entry.
Our team of experts have detailed knowledge of the legal landscape in Brazil to ensure operators have the correct licences, certifications, procedures and strategies in place to meet all legal requirements.
Gambling regulatory bodies and responsibilities
Caixa Econômica Federal regulated Brazil’s gambling market for many years during prohibition. In 2018, this responsibility was transferred to SEFEL (the Secretariat of Tax, Energy, and Lottery), which subsequently became SECAP (Secretariat of Evaluation, Planning, Energy, and Lottery).
With the new laws in place, Brazil's Ministry of Finance (Ministério da Fazenda) is set to play a leading role in clarifying certain aspects of the new law and navigating future regulatory changes. The Ministry of Finance oversees the country’s financial and economic policy, including those relating to the gambling industry.
Its primary responsibilities (as it relates to gambling) include the following:
- Policy Development: Advising and implementing policies and strategies.
- Regulatory Oversight: Ensuring operations are fair and transparent.
- Taxation: Setting tax rates and tax collection on gambling activities.
- Licensing: Reviewing applications and issuing licences.
- Consumer Protection: Safeguarding consumers from unfair practices.
- AML Compliance: Prevention of money laundering and terrorist financing.
- Economic Impact: Assessing financial risks and benefits to the country.
Compliance requirements and responsibilities for iGaming operators
Obtaining a Brazilian iGaming licence can be challenging, and operators should expect to go through a process designed to ensure compliance with current legal and regulatory standards.
Background checks of owners and key personnel, together with business plans, financial projections, and operational details, are necessary for application submission. Applicants must also provide a range of financial statements and documents demonstrating proof of compliance with anti-money laundering (AML) and know-your-customer (KYC) protocols.
On receipt of a gambling licence application, the regulating authority evaluates the applicant's suitability under well-defined technical standards for fairness and security. If the application succeeds, the operator must pay a licensing fee of R$30m (US$ 6.1m), valid for five years and allowing the operator to promote up to three brands. In addition, licensed operators are liable for an 18% gambling tax on revenues and monthly inspection fees that fluctuate depending on net income.
Under the new regulations, operators that want to offer fixed-odds betting must have a subsidiary in Brazil with a local shareholder owning a minimum of 20% of the holding (under current law).
Maintaining a gambling licence in Brazil also requires adherence to a number of compliance and responsible gambling practices.
Operators must:
- Advertise in a socially responsible way by protecting vulnerable groups from the dangers of excessive and irresponsible gambling.
- Verify the bettor’s identity and check they are over 18.
- Offer customers self-exclusion windows ranging from one day to six weeks and allow bettors to limit playing time and losses.
- Implement Know Your Customer (KYC), Anti-Money Laundering (AML), and anti-terrorist checks on customers.
- Create a local customer service centre that provides 24/7 service in Portuguese via free electronic and telephone channels.
Regulatory challenges, pitfalls and strategies for success
Obtaining a gambling licence is fraught with intricacies, and navigating the bureaucratic landscape demands foresight and detailed planning.
A common pitfall is underestimating the complexity of regulatory frameworks, which can lead to delays or even rejection of licence applications. Brazilian gambling laws are new and evolving, and what is law today may change tomorrow. Failure to stay updated can lead to non-compliance, risking penalties or licence revocation.
Financial compliance is equally critical. Like all other regulated markets worldwide, the Brazilian gambling market demands stringent financial transparency and proof of solvency. Any discrepancies can be a significant roadblock to securing a licence.
At Altenar, we understand these challenges intimately. Our iGaming software is designed with the flexibility to adapt to regulatory changes, providing a stable foundation for your compliance needs and success in Brazil.
Adopting a proactive, informed, and responsible approach allows your business to navigate the regulatory requirements and enjoy sustainable growth in this new and exciting market.
5 top tips for success in 2024
Opportunities and future outlook
The enactment of Law 14.790 has introduced many compliance challenges. Still, 2024 will be a transformative era for iGaming in the region, especially for early investors who can overcome prevailing volatility and uncertainty issues relating to the legal framework.
The market's potential is undeniable. Brazil's large population, combined with expected revenue of US$1.97 billion in 2024 and a projected annual growth rate of 15.39% until 2029 underlines its size and scope.
For forward-thinking operators and suppliers, now is the right time to engage with the legal landscape and take early mover advantage.
Source: Altenar
